4 ms·

This is commonly claimed but is there any data to support this thesis?

JamisonM 6y ago
Joseph Francis Ladue founded Dawson City and became a very rich man by expoiting the gold rush that way instead of mining (he ended up making some money directly from mining stakes as well in the end though). I believe his reputation and life story are certainly one of the foundations of that popular idea. I don't know of any empirical studies of commerce in the Yukon gold rush that demonstrated that the merchants were the fattest of the fat cats in the the whole scenario though. Lots of stories of scammer and schemers making big bucks too, but again, who really knows? Very few legitimately struck it rich on gold, that's for sure.
55555 6y ago
Your intuition is correct. Look up the market cap of gold and then look up the market cap of shovels.
- fzil 6y ago
  but that only makes sense if the only thing you did with shovel was dig for gold...
  - 55555 6y ago
    But the market cap of gold is vastly more. What you're saying is that the market cap for shovels would be the upper bound of the real number we are looking for, as there are other uses. So we can simply be more sure that gold has returned more economic value to those who obtained it than those who created shovels. The truth is, what I said doesnt make any sense at all. I never thought it did. But thinking about it for a few seconds makes it obvious that it's unlikely selling shovels is actually a better business than digging gold. The major gas companies make more money than the companies who build rigs. Selling shovels is a lower variance method of capitalizing off a gold rush. I prefer to do both. Most every successful startup is essentially someone digging for gold in a new gold rush. Rarely are they selling shovels. Digging for gold or oil is kind of a misnomer as the important thing in both cases would be owning land with the appropriate land rights. The common saying is misleading. It should be, "you're unlikely to lose your shirt, will have a higher likelihood of success and stability, and an overall easier time selling shovels in a gold rush, but with lower overall gain than the outlier winner gold miners" but that doesnt quite roll off the tongue.
edoceo 6y ago
Levi Strauss did this in a literal gold rush - and used the capital to pivot to pants https://en.m.wikipedia.org/wiki/Levi_Strauss https://en.m.wikipedia.org/wiki/Levi_Strauss
- cinntaile 6y ago
  Typical gold mining equipment isn't mentioned in that article at all, he seems to have had a regular dry goods store? I checked out one of the sources but I found nothing there either. A typical dry goods store was probably still good business during a gold rush though.

Joseph Francis Ladue founded Dawson City and became a very rich man by expoiting the gold rush that way instead of mining (he ended up making some money directly from mining stakes as well in the end though). I believe his reputation and life story are certainly one of the foundations of that popular idea. I don't know of any empirical studies of commerce in the Yukon gold rush that demonstrated that the merchants were the fattest of the fat cats in the the whole scenario though. Lots of stories of scammer and schemers making big bucks too, but again, who really knows? Very few legitimately struck it rich on gold, that's for sure.

55555 6y ago

Your intuition is correct. Look up the market cap of gold and then look up the market cap of shovels.

fzil 6y ago
but that only makes sense if the only thing you did with shovel was dig for gold...
- 55555 6y ago
  But the market cap of gold is vastly more. What you're saying is that the market cap for shovels would be the upper bound of the real number we are looking for, as there are other uses. So we can simply be more sure that gold has returned more economic value to those who obtained it than those who created shovels. The truth is, what I said doesnt make any sense at all. I never thought it did. But thinking about it for a few seconds makes it obvious that it's unlikely selling shovels is actually a better business than digging gold. The major gas companies make more money than the companies who build rigs. Selling shovels is a lower variance method of capitalizing off a gold rush. I prefer to do both. Most every successful startup is essentially someone digging for gold in a new gold rush. Rarely are they selling shovels. Digging for gold or oil is kind of a misnomer as the important thing in both cases would be owning land with the appropriate land rights. The common saying is misleading. It should be, "you're unlikely to lose your shirt, will have a higher likelihood of success and stability, and an overall easier time selling shovels in a gold rush, but with lower overall gain than the outlier winner gold miners" but that doesnt quite roll off the tongue.

edoceo 6y ago

Levi Strauss did this in a literal gold rush - and used the capital to pivot to pants https://en.m.wikipedia.org/wiki/Levi_Strauss https://en.m.wikipedia.org/wiki/Levi_Strauss

cinntaile 6y ago
Typical gold mining equipment isn't mentioned in that article at all, he seems to have had a regular dry goods store? I checked out one of the sources but I found nothing there either. A typical dry goods store was probably still good business during a gold rush though.